President Joe Biden to Propose 5% Cap on Annual Rent Hikes Amid Housing Crisis

President Joe Biden is set to propose a 5% annual cap on rent increases for large landlords to address soaring housing costs. The announcement will be made during his visit to Nevada on July 16, aiming to curb inflation and support tenants facing significant rent hikes.

Biden to Advocate 5% Rent Cap in Response to Escalating Housing Affordability Crisis

A source familiar with the matter has indicated that President Joe Biden is prepared to suggest a 5% limit on annual rent increases for tenants of significant landlords to demonstrate his action to address the exorbitant cost of housing, according to Fortune.

Amid a tense presidential campaign and a period in which housing costs have been a significant factor in overall inflation, Biden advocates for the proposal, which will be disclosed during the president's visit to Nevada on July 16.

However, the proposal would require a solid Democratic majority in Congress to be enacted. Furthermore, most policymakers have stated that the most effective approach to reducing housing costs is to increase the construction of new homes and modify land use regulations.

The individual who knows the plan spoke anonymously because the proposal has yet to be formally announced.

Biden previewed the announcement at his NATO news conference on Thursday, incorporating it into remarks that attributed inflation to companies seeking to optimize their profits in the wake of the pandemic.

“It’s time things get back in order a little bit,” Biden said. “If I’m reelected, we’re going to make sure that rents are kept at 5% increase.”

The Washington Post was the first to disclose the plan's specifics on July 15. The plan would only apply to landlords who own 50 or more units. Units that still need to be constructed would be exempt from the price restriction.

White House officials declined to respond.

Biden's Rent Cap Plan Faces Criticism Amid Rising Housing Costs and Inflation Concerns

According to Apartment List, the median national rent, approximately $1,150 in early 2021 when Biden assumed the presidency, increased to $1,411 monthly in June.

In the wake of the pandemic, the asking prices for rentals increased, but they have since diminished. However, the Harvard University Joint Center for Housing Studies discovered in its most recent report that half of the tenants are "cost-burdened" because they allocate over 30% of their income to housing and utilities.

Housing has been a significant factor in maintaining the consumer price index at 3% annually in recent months. As he competes against Donald Trump, the former president and Republican nominee, inflation has been a fundamental political obstacle for Biden.

Industry representatives swiftly criticized the rent limitation as ineffective in addressing the overall shortage and potentially resulting in fewer habitable units than the country would have otherwise, despite the president's proposed policies to increase home construction.

“This is not going to create a single unit of housing — which is what is needed to create more housing opportunities for Americans,” said Sharon Wilson Géno, CEO of the National Multifamily Housing Council. “This is really a campaign-driven piece of rhetoric.”

Géno observed that proprietors must be capable of managing expenses such as insurance, maintenance, and state and local taxes. The risk is that landlords may neglect the maintenance of their properties, which could result in tenants being worse off if the costs exceed the amount they can charge for rent.

“What does that mean — the quality of the housing suffers,” she said.

However, advocates for affordable housing asserted that implementing Biden's proposal would have likely mitigated homelessness and evictions.

“The recent unprecedented increases in homelessness in communities across the country are the result of those equally unprecedented — and unjustified — rent hikes of a couple of years ago,” said Diane Yentel, president and CEO of the National Low Income Housing Coalition. “Had such protections against rent gouging been in place then, many families could have avoided homelessness and stayed stably housed.”